Developers, town push for Hilton Head tax-district extension

tbarton@islandpacket.comFebruary 23, 2014 

Fifteen years ago, Coligny plaza owner James N. Richardson Jr. could count on one hand the number of days a year a town-owned beach parking lot across the street would fill up.

Residents and visitors walking or biking to the beach along Pope Avenue were also a rare sight.

"Before, there was no connection from the beach to Sea Pines Circle, and it wasn't very safe," Richardson said. "You had a small, poorly maintained bike path along one side of Pope Avenue.

"Today, there are bikes everywhere, and the beach is packed during the summer."

It's a transformation he, town officials and others attribute to the tens of millions of dollars spent by the town through a special tax district.

Now, town officials want a 10-year extension on the district, set to expire in December, to build a University of South Carolina Beaufort hospitality campus and Osher Lifelong Learning Institute on Office Park Road.

They have to persuade other partners in the district -- Beaufort County and the Hilton Head Public Service District -- to sign on.

The Beaufort County Board of Education, another partner in the district, voted 8-2 on Feb. 18 to agree to an extension after some concerns about lost revenue as it adds new schools in the Bluffton area.

The extension means the partners will forgo additional revenue from increased property values within the district during the 10-year period, with the hope that more money will flow in after the development projects are done. The public service district is scheduled to discuss the extension Tuesday. Beaufort County Council has not scheduled a date yet to consider it, but county administrator Gary Kubic said he planned to recommend that council agree to the extension.


Tax-increment finance districts allow municipalities to collect taxes to spur revitalization in blighted areas with public works projects that stimulate development, which in turn raises property values. When revenue collected from taxes within the district increases because property values rise, the extra money -- the increment -- is shaved off and used to pay for development projects within the district.

Hilton Head's district includes about 1,400 mostly commercial acres along the south end's Palmetto Bay Road-Pope Avenue "Bridge to the Beach" corridor, and the north-end Stoney, Squire Pope, Chaplin and Mathews Drive areas.

Since creating the district in 1999, the town has spent nearly $52 million to build parks and paths, improve roads, extend sewer service, purchase land for future and existing development, and other uses. Another $12.5 million has been earmarked for further road, landscaping and path improvements, as well as parks and a rowing-and-sailing site along Skull Creek.

As a result, assessed property values within the district have increased 122 percent, compared to an overall 99 percent increase for all other properties on Hilton Head, the town says.

Assessed values also climbed slightly higher than properties countywide did, during a period of rapid growth in Bluffton and the surrounding area, according to town figures.

Supporters call the district a fail-safe financing tool to hasten needed improvements without a tax increase. Others say the districts expose taxpayers to unnecessary debt risk, shift the tax burden to properties outside the district, and drain money from the county and local schools to pay for public projects that could disproportionately help private developers..


The 10-year extension would generate another $50 million for the USCB campus and other projects, including a 1.5-mile park trail linking the redeveloped Shelter Cove Towne Centre with the beach and a new park; a children's museum; beach parking; and road improvements along Pope Avenue, according to town projections.

While property values have increased and public improvements have made the commercial areas safer and more attractive, pockets of blight remain, with vacant office and hotel buildings in disrepair.

Revitalizing Coligny also remains a work in progress, Richardson and town officials say.

"We haven't done as much on the south end as we intended to do and as we should have, largely because of disagreement about what to do in Coligny," town manager Steve Riley said.

Of the $52 million, about 60 percent has been spent in the island's Ward 1 on the north end. The extension would even out the funding distribution, Riley said.

Supporters of the extension say it is needed to build on the momentum that has been occurring on the island as it recovers from the Great Recession.

About $250 million was invested in redevelopment projects on the island in 2012-13, with major renovations by island hotels.

About 450 jobs and $5.1 million in annual sales-tax revenue are expected to result from the soon-to-be-completed $76 million Shelter Cove Towne Centre, the town says. And Sea Pines Resort and Pineland Station shopping center have plans for large-scale renovations in 2014-15.

Kubic said Friday he will advise County Council to continue participating in the district, for the same reasons given by the school board. A USCB campus would add vibrancy to the island in the off-season and enhance educational opportunities for students young and old, and help the island meet its needs as an evolving tourism destination, Kubic said.

And the timing is right if the town hopes to entice commercial development, according to Palmetto Dunes and Shelter Cove developer Robert Onorato. He says interest rates are still low, and developers are more willing to invest in big projects that were shelved during the economic downturn.

"The momentum is there," Onorato said. "People are looking for things to happen on this island. The tax district gives Town Council the ability to take on the (large) size projects in areas that are asking to be developed, and we have developers with the wherewithal and vision to make it happen."

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